This stock’s surged almost 10%! Should you buy it for your ISA?

Looking to load up your ISA? Royston Wild looks at a surging share in start-of-week business and considers whether it’s worthy of your investment cash.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

pink toy piggy money box on yellow background

Image source: Getty Images

Investor appetite was quite tepid on Monday morning, with UK share markets flatlining from last week’s close. It’s no surprise, as Covid-19 uncertainty keeps all us ISA investors guessing. One share that’s not suffering from weak stock-picker appetite, however, is Pendragon (LSE: PDG).

The retailer’s shares are up close to 10% in start-of-week business, putting it at its most expensive for five weeks. News that Dietmar Exler, current chief operating officer of AMB Sports & Entertainment, has been parachuted in as an independent non-executive director has boosted hopes of a turnaround for the embattled auto seller.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Exler has considerable expertise in the car industry. His former roles include president and CEO of Mercedes-Benz USA, as well as head of region at NAFTA Mercedes-Benz.

It’s the latest move intended to beef up Pendragon’s board. Bill Berman was appointed chief executive in mid-February following a run as the company’s interim chairman. Berman was previously head of AutoNation, the biggest car retailer in America.

Giddy!

No disrespect to Exler, but I fear today’s intense buying of Pendragon’s shares is a huge overreaction. The car giant’s problems are significant. I, for one, would want to see a significant upturn in market conditions before I buy it for my ISA. As it stands, news flow continues to get worse and worse.

Trade over at the FTSE 250 firm has long been in the doldrums. Brexit uncertainty has smacked demand from private and commercial customers in recent years. And the possibility of a no-deal withdrawal from the European Union at the end of 2020 casts a shadow over sales for much of the new decade.

The coronavirus outbreak has made the Brexit impact look like small potatoes though. Data from the Society of Motor Manufacturers and Traders showed new vehicle transactions collapsed by almost half in March. Latest figures on UK household finances suggest sales of big-ticket items like new and used autos will continue to struggle too.

According to IHS Markit, Britons’ sense of financial wellbeing has weakened to its worst since November 2011. A reading of 34.9 for April also represented the largest month-on-month drop since records began in 2009.

The letters ISA (Individual Savings Account) on dice on stacks of gold coins on a white background.

A poor ISA pick

In line with government guidance, Pendragon has shuttered all of its retail sites in Britain. It’s unclear when showrooms will be opened to the public again. But even when the doors are unbolted, there won’t be a throng of people flooding onto its forecourts if mass unemployment and widespread corporate failures materialise.

So forget about City forecasts that Pendragon will flip back into profits this year from 2019’s losses. Treat predictions of an 84% earnings boom in 2021 with a considerable pinch of salt.

The retailer’s cheap price, illustrated by a forward P/E ratio of below 9 times, reflects its high-risk profile for this year and beyond. There are much, much better shares to fill your ISA with today.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Pendragon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Social media and digital online concept, woman using smartphone
Investing Articles

Apple stock: Buffett is long, Burry is short. What should I do?

Our author thinks about whether following Warren Buffet into Apple stock might be a good addition to his portfolio –…

Read more »

Close-up of British bank notes
Investing Articles

5 ‘no-brainer’ dividend shares to buy today

Is there an easy way to narrow down the list of FTSE 100 dividend shares? I try one approach, with…

Read more »

Close-up of British bank notes
Investing Articles

£5,000 to invest? 2 dividend-paying penny stocks I’d hold to 2030

I think these high-yielding penny stocks could help cushion the impact of high inflation on my returns. Here's why I'd…

Read more »

Renewable energies concept collage
Investing Articles

2 green stocks that I think are no-brainer buys for the future

Jon Smith explains two of his favourite green stocks at the moment, one for growth and the other for income…

Read more »

An airplane on a runway
Investing Articles

The Rolls-Royce Share price may be set for take-off!

After an upbeat Civil Aerospace Investor Day, here's why I think the Rolls-Royce share price could be set for take-off…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

2 beaten-down growth stocks to buy as inflation rises

Despite inflationary pressures and recession concerns, I am looking at some top growth stocks to solidify my portfolio over the…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Is the IAG share price too good to miss at current levels?

Jabran Khan delves deeper into the current state of play with the IAG share price and decides if now is…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

5 of the highest-paying income stocks compared! Which one is best for my portfolio?

Income stocks are certainly in vogue right now amid sky-high inflation. But which of these big dividend payers is the…

Read more »